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Another letter says:
More Good Results—in the First Year of Mortgaging Out
“This is my first year of real estate investing and it has been a very profitable one, thanks to God, your books,
Bootstrap Your Way to Your Real Estate Cash
courses and newsletters. From March to November, I acquired 8 houses and one building lot, all valued at $350,000, with only $650 down. At the same time I mortgaged out with $27,000 of tax-free money. Including my personal home, my real estate assets total $400,000; my net worth is $150,000 and the investment property gives me a Positive Cash Flow of $500 per month. In addition to the acquisitions, I originated and closed $145,000 in first mortgages. Thanks for your creative ideas.” —Virginia
The Powerful Methods You Can Use to Mortgage Out
“So what methods should I use to mortgage out?” you ask. Here are seven practical, hands-on methods to use today:
1. Offer less than the appraised value of the property. Why? Because a lender may offer to lend you money based on the appraised value of the property. You then automatically have more money than you need to buy the property. This will be money in your fist—MIF = Money-in-Fist!
2. Get the seller to give you a Purchase Money Mortgage for the largest amount possible for the longest term (years) you can negotiate. Why use a PM? Because you may be able to get a Zero Cash deal. With your below-appraisal price offer and your PM second mortgage, you can generate thousands of dollars of MIF on even a small property.
3. Work with Private Lenders who believe in creative deals. With such lenders, your credit—my good friend—is less important than your inspirational approach to the deal and your creative ideas for the property. You can call me any time you want and I’ll be glad to give you a list of Private Lenders for your real estate deals—if you’re a subscriber to one of my newsletters mentioned at the back of this book.
4. Apply for the largest loan possible for the property you’re considering when contacting first mortgage lenders. Why? The extra money is always useful for your business. Further, the interest you pay is provable and tax-deductible by your real estate business.
5. Ask for the longest term for your first mortgage loans. The
longer the term of your loan, the lower your monthly payment. With higher Money-in-Fist, you can live a better life. And you can expand your business by buying more properties, mortgaging out on them as you have on earlier properties.
6. Ignore the negative thinkers in your life who say “Never borrow money; the interest will “kill” you.” Not so when you’re in the real estate business! Everyone in real estate borrows money for business uses in their real estate activities. And never forget: THE INTEREST YOU PAY ON REAL ESTATE INVESTMENTS IS PROVABLE AND TAX-DEDUCTIBLE BY THE BUSINESS!
7. Follow the Hicks principle in your real estate life, namely: If you can get a loan for your real estate deal that allows you to mortgage out, take the loan, even if the interest rate is high. Why should you take the loan? See Item 6 above. Further, you can almost always refinance the loan at a later date at a lower interest rate. So the high rate is usually only a temporary condition. In what other business can you get cash in hand plus a monthly income while having fun?
Build Your Mortgaging-Out Wealth Quickly
You don’t have to spend years building a mortgaging-out real estate empire. Here’s a reader letter showing you what can be done in an area known for its high real estate prices:
Results of Another One-Year Mortgaging-Out Success
“I have been involved in acquiring income producing real estate for approximately one year. I have acquired over one million dollars of property with zero cash down, and have pulled a considerable amount of cash from the transactions. I work part time as a freelance advertising consultant and my wife is a university professor. I have a management
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company that handles the properties. All the property is currently rented, some with Lease Purchase tenants.”
This letter is another example of mortgaging out. As part of his letter, this reader supplied a partial listing of his properties, their value, existing loan balance, current rent, and monthly cash flow from each property.
Table 4.1 shows partial data from his listing of 11 properties that he acquired in just one year. His table lists the actual street address of each property. To protect his privacy, I’ve given a number to each property, instead of using its street address. I’m sure you would want me to do the same for you if you submitted such a list to me. Besides, the address of the property has little influence on the message this listing has for you.